Control All Business Processes in the Organization - Essay Example

ntеrрrisе Rеsоurсе Рlаnning Name Institution Date Table of Contents Running Head: ЕNTЕRРRISЕ RЕSОURСЕ РLАNNING 1 Еntеrрrisе Rеsоurсе Рlаnning 1 Name 1 Institution 1 Date 1 Table of Contents 2 ЕNTЕRРRISЕ RЕSОURСЕ РLАNNING 12 2 Introduction 3 ERP 3 ERP software selection 4 ERP Implementation 5 ERP Modules 6 Accounting and finance 6 Human resource management 6 Supply chain management 6 Customer Relationship Management 7 Business intelligence 7 Investment management 7 Enterprise controlling 8 Plant maintenance module 8 Case study of failed implementation of ERP system: CosmeticCo, China 8 Part B 9 ORACLE vs SAP 9 Conclusion 11 References 11 Introduction Recent growth in ICT, driven by computer software and hardware systems as well as microelectronics has had significant implications is the use of computer applications by organizations. At the same time, the environment of business has increasingly become very complex and this calls for further inter-functional flow of data to enhance decision making, accounting, efficient and timely products’ procurement as well as management of human resources and inventory. This paper will investigate the use of Enterprise Resource Planning systems in organizations. ERP According to Al-Fawaz et al (2008), the basic definition of ERP is that of an information system that is enterprise-wide and serves to integrate and control all business processes in the organization. These are software systems that are used for management of business and they encompass modules that support functional areas like manufacturing, planning, distribution, accounting, marketing, finance, project management, human resource management, inventory management and e-business. This software is purported to facilitate integration of the flow of all the information in the organization into one package that has a common database. The ERP system started emerging in the market in the latter years of 1980s and early 1990s (Rashid et al, 2002). Prior to this, the 1960s had the existence of the inventory control packages for business management. This was followed by the 1970s’ use of the materials requirements planning (MRP). In the 1980s, the MRP was transformed to the MRP II. The 1990s then saw the emergence of the ERP systems. These systems further transformed to the Extended ERP in the 2000s (Rashid et, 2002). The need for the development of this system came as a result of the increasing complexity of operations in business organizations. There was increasing need to catch up with the business environment which required that management of resources and inventory is done appropriately, procurement is done on time and efficiently and that decision making and accounting are enhanced. The expensive, powerful and proprietary system was therefore developed and implemented based on the requirements of the company. In most cases, the organization was forced to change their business processes in order to accommodate the software modules’ logic to streamline the flow of data across the organization. This system provides value to the business by its design. Its architecture facilitates open modules’ integration while ensuring that information flow between functions in the organization happens in a manner that is consistent and visible. Through this system, effective planning and management of all business processes is achieved. This ensures effective running of the business. ERP software selection While selecting the ERP system for an organization, various factors have to be considered. First, the system should be future proof. It should grow with the organization. The system should also be able to provide the value required by the company. There should be a match linking concept and delivery. The selected vendor should also have been in the industry for some time and should have deep knowledge of the system. In addition, the implementation of the system should be able to be done fats and the system should provide value as soon as it is implemented. It is worth noting that the system should be tailor-made for the organization. Besides, the vendor should have the experience and expertise to deliver the system. Even as the organization looks to bring in an ERP system, its financial foundation should be sound. The technology selected should help the business compete effectively and successfully. In addition, the system selected should protect the investment made. The vendor should maintain the customers’ needs. Research should be done to ensure that the moments of truth from the customers are captured. Furthermore, the vendor should have a reputation of integrity and dedication in their business. Finally, the selected system should deliver the return on investment (Epicor White Paper, 2009). ERP Implementation The implementation of the ERP starts with the analysis of the business process. The process is studied in details and any bottlenecks and dependencies in the departments identified. This is followed by gap analysis where the gap to be bridged is identified. The re-engineering process is then done and this entails changes in flow of process, roles of employees and technical details. Next, the system is designed based on the new research and development. Proper planning is done and the business process is mapped along with designing of the interfaces. Training is then done to maximize the output of ERP. Functional as well as operational training is done. The system is then tested, where the incorporated processes are tested and any observations and recommendations made. The system is then implemented and the noted issues are fixed. This is then done by the monitoring and the results compared with the parallel system (Sybil, 2009). ERP Modules Accounting and finance The accounting software of the ERP system should access information in every area of the organization. On the other hand, the financial solution has to provide information to the management so that management makes strategic decisions that will ensure the attainment of a comprehensive advantage. The accounting module provides the ability to track the data on financial accounting centrally in a framework of several companies, currencies, languages and accounts’ charts (ERP Modules, 2012). Human resource management HRM is essential for the success of any business and this module encompasses subsystems like personnel management, management of the organization, time management as well as personnel development. Supply chain management This module is commonly used by manufacturers. The module is used throughout the production process of the manufacturer. Some of the steps that are followed include planning, forecasting, inventory, execution, demand planning, reporting, logistics, raw material management, delivery, processing of returns; the modules may be supplied as a software as a service (SaaS) or as an on-site solution. The choice of the solution is based on the manufacturers’ demand (ERP.Com, 2011). Customer Relationship Management This module provides details on the transactions of every customer from one place. They provide the integration of data on customers, otherwise called master data management and this helps keep record of customers in all the channels of sales from field sales, phone to online services (Manufacturing ERP, 2009). Business intelligence The business intelligence module of ERP systems present full, real-time and an insight that is enterprise-wide to the users. This ensures that the interactions are based on facts and they are intelligent. The applications are usually pre-built solutions which begin with the client, embrace existing source of corporate data and are integrated into the ERP system to ensure that the transaction of the system and the customer is effective. Investment management This module provides broad support to the processes of investment from the time of planning to settlement. This module facilitates the planning of investment as well as budgeting at a level that is higher than what is needed for the specific projects or orders. It further allows for the distribution of budgets used during the process of capital spending. This system helps in monitoring of the budget and as such, budget overruns are avoided. This module recognizes the significance of the aspects of asset accounting on investment measures. It therefore separates costs automatically and debits the right costs for the asses that is under construction. Enterprise controlling This module comprises the functions that optimize the value of shareholders and at the same time it meets the internal objectives that are required for investment and growth. It includes business planning, executive information system, profit center accounting and consolidation. Plant maintenance module A performance that is world class calls for delivery of products that are high quality both economically and expeditiously. This module ensures just in time minimization of work in process and elimination of manufacturing processes that are wasteful. The module includes a whole products’ family that covers all the aspects of plant maintenance and ensures process improvement is achieved (ERP Modules, 2012). Case study of failed implementation of ERP system: CosmeticCo, China According to Xue et al (2004), the process of ERP implementation is complicated and entails inevitable interactions of ERP systems and the context of implementation. The CosmetiCo company in China deals with cosmetics that are of the herbal series. In 1998, the company discovered that the existing software for finance could not help the company realize the requirements for development and it opted for implementation of an ERP system. The company selected Intentia AB from Sweden as the package provider for the software and Legend Advanced Systems Ltd (LAS) as the provider for the service. The necessary contracts were agreed and signed for the Movex software. During implementation, the package for the Movex software was not fully translated to Chinese. The English words used confused the employees completely. In addition, the format used for the financial tablets together with the report that Movex generated differed from the requirements by the Chinese government. They were also incompatible with financial standards in China. The format used for numbers and the placement of signs, especially the negative sign brought a lot of confusion since it was different from that used in china. Consequently, Movex made purchasing and manufacturing reports at lower speeds than the manual methods did. LAS, the service provider, was not conversant with Movex and the procedures for standard implementation were not followed like the supplier of the software required. By the end of the year 2000, LAS had not yet found a solution and CosmetiCo filed sued LAS on December/11/ 2012. The case was ruled in CosmetiCo’s favor and LAS paid $250,000 to CosmetiCo. CosmetiCo restarted the project using HJSoft as the software and service provider and this ensured integration of sales, inventory, purchasing as well as finance management. Some of the factors that could lead to failure of the implementation process include an unclear perception of the use and the nature of system from the perspective of the user, poor transfer of knowledge, poor effectiveness of consultancy and the resistance of the users to change (Wong et al, 2004). Part B ORACLE vs SAP The oracle system is a platform that has not less than one application that runs on it to process and access data. Logically, the data is stored as table spaces while physically, it is stored as data files. On the other hand, SAP is an application that is based on the client server and utilizes a model that is three tiered: presentation, database and application layer. According to The Economic Times (2012), oracle has a market share of 15 % while SAP has a market share of 60 %. SAP is purported to be powerful software for use in a manufacturing environment. Its modules such as the material management module, finance3 and sales distribution are great packages. The proprietary language used for developing SAP is the Advanced Business Application Programming and the application has been developed in a way that the existing code can be modified or more functions can be developed on it. Some of the business challenges that the SAP ERP efficiently deals with include: the end user delivery of service, the SAP ERP financial, human capital management, performance management, corporate services and operations. Oracle has been divided into editions that are used for tracking sales and marketing. These include the standard edition, enterprise edition, express edition and oracle personal edition. Several other applications like business process outsourcing, enterprise performance management, procurement, project management, transportation suite and human resource management can be installed on the oracle platform. The price of SAP software plus service and three years maintenance is averagely $ 702 while that of oracle is $ 513 (Adams et al, 2008). The SAP is the better option since it has flexibility options after the application has been installed. The language used to develop this system provides room for development of applications using programming that is object-oriented. Despite the fact that the domain of the organization, SAS is more all rounded and works effectively. The package chosen should be tailor-made so as to suite the organizations’ system properly and to avoid any snags after installation. In addition, custom made applications reduce the amount of re-engineering that has to be done on the organization’s processes (Adams et al, 2008). Conclusion The ERP systems have been developed to enhance proper management of businesses by ensuring that the processes are run efficiently, resources are provided on time and budgeting as well as accounting is done efficiently. In addition, less time is lost on break down and allocation of resources. The choice of the system for use by an organization would be made based on the domain of the organization or based on the size of the organization but ultimately, the system should be mad to suit the organization. References Al-Fawaz et al, 2008. Critical Success Factors in ERP Implementation: A Review. European and Mediterranean Conference on Information Systems. Al Bustan Rotana Hotel, Dubai. Epicor White Paper, 2009. 12criteria for Selecting the Best ERP System Replacement. USA. ERP Modules, 2012. Retrieved from . ERP.Com, 2011. Introducing the Supply Chain Management ERP Module retrieved on December 12th 2012 from . Manufacturing ERP, 2009. ERP customer relationship management guide, retrieved on December 12th 2012 from . Oracle Business Intelligence, 2011. Be the First to Know. Rashid et al, 2002. The Evolution of ERP Systems: A Historical Perspective. Idea Group Publishing. USA. Wong et al, 2004. Critical Failure Factors in ERP Implementation. UK. Xue et al, 2004. ERP implementation failures in China: Case studies with implications for ERP vendors. Int. Journal of Production Economics 97 (2005) 279–295. USA. Read More